Zen Energy Faces Liquidation Due to High-Risk Solar Strategy
Zen Energy, a renewable energy retailer, is facing liquidation amid a creditors’ meeting this week, following the discovery by voluntary administrators of no feasible alternatives for the struggling company. The administrators have highlighted critical factors contributing to the venture’s downfall.
The findings reveal a high-risk trading strategy that adopted an aggressive stance on solar energy while severely underestimating battery storage needs. As a result, secured creditors may receive only a maximum of 10 cents for every dollar owed in the event of liquidation, with unsecured creditors likely receiving nothing.
Challenges and Financial Struggles
Appointed as voluntary administrators in early July, McGrathNicol took charge following the sale of Zen’s infrastructure division and the receiving of regulatory nods for a potential sale of its retail operations to Swiss commodities trader Gunvor. Regardless, the company’s challenges have escalated, with SA Power Networks pursuing a court order to wind up the firm due to unpaid bills.
Founded in South Australia in 2024, Zen Energy was initially led by prominent figures Ross Garnaut and his son, Anthony. The company managed to establish a solid presence within the renewable retail sector, securing significant contracts with state government bodies and various organisations.
Market Pressures and Governance Issues
However, McGrathNicol revealed that the business model came under severe pressure around mid-2025, primarily due to a marked decrease in Large-scale Generation Certificate (LGC) prices, escalating liabilities, and an increasing dependence on noteholder funding as the company attempted to navigate through restructuring, sales, and recapitalisation efforts.
The failure to complete the sale and recapitalisation process, along with the collapse of the transaction for the remaining retail business after divesting its infrastructure assets on June 24, 2026, served as a decisive blow. “A revised proposal for the remaining business did not offer sufficient value or certainty for the Directors to continue the sale process, leading to the appointment of voluntary administrators on July 3,” the report explained.
The creditor report outlines that Zen’s directors identified significant market risks associated with the business model due to long-term and substantial positions in the energy market, as adverse market conditions developed over the past two financial years. They cited the existence of long, unhedged LGC positions, alongside excessive payments made to secure essential energy products and contracts, such as Power Purchase Agreements (PPAs), battery tolling rights, and wholesale contracts.
Underlying Issues and Financial Outlook
The administrators also pointed out Zen’s extensive solar generation position, which resulted in the sale of electricity at a loss, along with delays in storage assets being operational that could have cushioned the impact of poor evening peak positions. They referenced potential shortcomings in corporate governance and risk management, suggesting the company failed to adequately manage risks when establishing its long-term business model.
According to creditor reports, Zen’s infrastructure arm, Zen Futures, was sold to noteholders for $45 million on June 24, following the withdrawal of several earlier offers. Gunvor first made a non-binding offer for the retail division in February and made several amendments before presenting a significant revised offer on July 2, which was ultimately turned down by Zen, leading the firm into administration the next day.
Concerns about the company’s trading position had lingered for some time, prompting the board to engage KordaMentha as “safe harbour advisors” last year, and Rennie Advisory to evaluate sale strategies. EY also provided an unqualified audit opinion on Zen’s FY25 financial statements, noting material uncertainties relating to going concern.
Financial Losses and Outstanding Claims
It has been noted that for the financial year 2025/26, Zen Energy incurred a pre-tax loss of $322 million and has shown losses in each of the past three years. The trading loss for the year stood at $70 million, which worsened due to financing costs and unrealised financial losses.
The administrators further stated that claims from senior noteholders amount to approximately $177.8 million, in addition to $15 million owed to super senior noteholders. The trade debtors total around $27 million, with staff wages owing set at $8 million, and up to $347 million in unsecured creditors.
